Interactive · Trade policy
Trade War. One tariff, three ways.
A tariff is a tax on your neighbor. But your neighbor votes too. Set the rate, see who retaliates, and count the jobs and prices as the story plays out.
The setup
Turn 1 of 6
You’re the U.S. president. Move your sliders and end the turn. Trading partners react.
Newsfeed
Sandbox
Pick any starting economy. Set tariffs sector by sector, partner by partner. Retaliation is optional here — this is for exploring.
How the model works & where the numbers come from
What we model. Each partner has a trade volume broken into three sectors (consumer goods, industrial inputs, agriculture). When you raise a tariff by t percentage points on a sector, imports fall by roughly ε·t, where ε is the price elasticity of import demand (we use conservative values in the 0.7–2.0 range by sector). Consumers pay most of the tariff at the register, so prices in that sector rise by about the same amount. Domestic producers gain some share back as “protected” output; the rest is deadweight loss.
Retaliation. Partners have a “must retaliate” meter that fills when U.S. tariffs on their exports cross a political threshold. When it hits, they slap equivalent tariffs on U.S. exports — usually where it hurts most (soybeans, autos, bourbon in 2018; agriculture and machinery in 1930). U.S. exports to that partner drop by roughly the same elasticity math, and export-dependent jobs go with them.
Jobs. Protected sectors gain jobs at ~1 per $500K of protected domestic production. Downstream sectors that use tariffed inputs (car makers using tariffed steel, retailers selling tariffed goods) lose ~3× as many jobs per dollar. Export-facing jobs lost to retaliation use the same ratio. These are illustrative, not forecasts — the point is the direction and rough scale.
Sources
- NBER — Irwin, The Hawley-Smoot Tariff and the Great Depression · dutiable rate 40% (1929) → 59% (1932); +6pp from the law itself.
- Britannica — Smoot-Hawley · 20,000+ goods; 65% collapse in world trade 1929–1934.
- PIIE — Destler, The 1934 System · US imports $4.40B → $1.45B and exports $5.16B → $1.65B (1929–1933).
- Explaining History (2025) · Canada retaliated in May 1930 on ~30% of U.S. exports to Canada; U.S. exports to retaliating nations fell by up to a third (Mitchener et al., 2021).
- USITC — Section 232 & 301 Trade Actions in 2018 · Steel 25%, aluminum 10%; China Lists 1–4; U.S. soybean exports to China fell 74% in a year.
- CRS — Escalating U.S. Tariffs: Timeline · Section 301 List 3 stepped from 10% to 25%; four stages 2018–2019.
- TradeWeave — US–China trade war 2018–2019 · ~$370B China goods covered across four lists; four rounds of Chinese retaliation.
- Avalara — U.S. Tariffs by Country (2026 overview) · April 2025 reciprocal rates, IEEPA-era rates, and the Section 122 10% rate effective Feb 24, 2026.
- TariffOS — IEEPA reciprocal tariffs · Timeline through the Feb 20, 2026 Supreme Court ruling.
- Yale Budget Lab (Nov 17, 2025) · Effective U.S. tariff rate 16.8%, highest since 1935; $1,700 per household short-run.
- Yale Budget Lab (April 2026 retrospective) · Realized 2025 consumer price effect 0.5–1.0pp — lower than the ex-ante 2.3% projection.
Model is intentionally simplified for teaching. Real trade models add exchange rates, monetary policy response, supply-chain reshoring, and second-round effects; those are omitted here for clarity.